If you like our content, make sure to subscribe to our channel!
Knowing basic economics allows consumers to be more informed when making financial decisions. Economics is a part of consumers’ daily lives, from going to the grocery store or filling out a loan application. Here are 6 economic concepts consumers should know:
- Supply and demand
When demand for a product is high, the price goes up and manufacturers make more of that product. When there is more supply of the product and less demand, the prices drop. - Scarcity
This refers to the gap between limited resources and the potential unlimited wants and needs of consumers. - Money supply
This is the amount of US currency circulating in the economy as well as in consumers’ bank accounts. Increases in money supply often result in decreased interest rates. - Opportunity costThis refers to the benefits a consumer misses out on by picking one option over another.
- IncentivesThese are rewards that are offered to motivate consumers to act a certain way, such as bonuses given to employees to encourage them to work hard.
- Costs and benefitsThis is when consumers compare the benefits a product or service will give them to see if those benefits outweigh the cost.
